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Behavioural Agency Theory

  • Alexander Pepper
Chapter

Abstract

This chapter explains that the conventional design of executive compensation plans, involving high salaries, generous bonuses, and highly leveraged stock programmes is based on an outdated set of assumptions about human behaviour and executive agency. It describes a revised theory of agency and a modified design framework for executive pay plans based on developments in behavioural science.

Keywords

Long-term incentive plans Risk aversion Time discounting Behavioural agency theory 

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Copyright information

© The Author(s) 2019

Authors and Affiliations

  • Alexander Pepper
    • 1
  1. 1.Department of ManagementLondon School of Economics and Political ScienceLondonUK

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